North Korea’s Foreign Investment Laws and Accounting System
Asian Tax Journal Vol. 21 No. 2 (2020), pp. 9-34
Abstract
This paper examines the laws on foreign investment in North Korea, the accounting system on foreign－invested companies, and the characteristics of legislation on foreign investment in socialist countries, such as China, Vietnam, Laos, Cambodia, and Myanmar. Here, no matter how much efforts have been made to revitalize foreign investment, it is difficult to activate it if investment risk and trust are not grounded. In fact, North Korea has revised its legislative form as a model for foreign investment－related legislation, and it referred to the legislation of China as well as the concrete legal structure. Thus, the institutions of China and North Korea are very similar. However, due to the international influence of the political environment and the unique form of the system, North Korea’s own special contents can only be reflected. In addition, even if North Korea has a well－developed foreign investment law, it is not easy to attract foreign capital because of its international credit problems. Even now, North Korea is assessed to have more favorable conditions in the system such as tax cuts than China. However, there is a strong impression that the governing practice at the discretion of the authorities is still stronger than the law, and the gap between the law and actual operation will be large. Therefore, this part needs to be overcome. On the other hand, unlike the legal norms of the capitalist system that guarantees that anyone can freely trade on the basis of the private property system and the principle of private autonomy, in the socialist system based on the nationalization of the means of production and national control and interference, Since there are bound to be conditional constraints, it is virtually difficult to establish a legal system that can be harmonized with the capitalist system. However, in order for the Foreign Investment Law, which aims to promote economic development and political stability, to function properly and achieve its ultimate goal, it is necessary to continue legislative efforts. Although North Korea’s foreign investment legislation and accounting system cannot be solved in a day, foreign investors’ investment risks will be reduced if they continue to make improvements step by step. In addition, we expect opportunities to unleash the potential to emerge as attractive investment destinations.
Keywords
- Foreign investment
- joint venture
- special economic zone
- open policy
- accounting regulations
- bookkeeping verification
- national treatment
- preferential measures
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